Ann: Natural Hydrogen Business Update - CSIRO, page-37

WA to impose royalty on hydrogen extraction

Peter KerResources reporter
Sep 25, 2023 – 4.34pm
Save

Share
Companies extracting hydrogen from underground in Western Australia will be charged a royalty under a refresh of the state’s hydrogen strategy.
But the WA Labor government says the revised strategy will not charge a royalty on hydrogen produced by electrolysis of water, which shapes as a bigger industry than extraction of geological hydrogen.
Hydrogen is a nascent sector and many Australian states are yet to clarify whether production of the clean-burning gas will attract the sort of state and federal royalties that are imposed on extracting minerals and petroleum products.
The WA government has this month asked industry to help shape the state’s hydrogen targets for 2030, which have to date sought to ensure WA’s share of the global hydrogen market is in line with its share of the global liquefied natural gas (LNG) market.
A government spokesman confirmed the strategy refresh would likely deliver the state’s first hydrogen royalty regime, but it would not affect the likes of BP, Yara and Fortescue that hope to export “green” hydrogen made by using renewable power to split water into its constituent parts.
“The government of Western Australia intends to charge a royalty on naturally occurring hydrogen, which is defined as hydrogen that is found in a natural geological formation,” he told The Australian Financial Review.

“The royalty rate for naturally occurring hydrogen has not yet been determined.
“Manufactured hydrogen (including green hydrogen) will not incur a royalty.”
The plan to charge a royalty only on extracting naturally occurring hydrogen mirrors the approach taken in South Australia, where a 10 per cent royalty must be paid on any hydrogen extracted from underground.
No prescribed royalty charge for hydrogen was included in Tasmania’s most recent update to its mineral royalty regime, but the state government said naturally occurring hydrogen was considered a mineral under the act and producers would therefore face a maximum charge of 5.35 per cent of net sales.
Queensland does not charge a royalty on any type of hydrogen production.
A discussion paper published by the WA government suggests the strategy will include an increased focus on using hydrogen domestically to make higher-value products, such as by turning iron ore into “green” iron.

The WA strategy will also focus on removing permitting hurdles for big hydrogen export projects, which require vast amounts of land and water.
The discussion paper published by the WA government also appeared to place a lower emphasis on hydrogen’s role as a transport fuel.
Former Woodside boss Peter Coleman is also planning to manufacture green hydrogen in WA as chairman of Infinite Green Energy, which has partnered with Korean giant Samsung.
Peter Ker covers resource companies for The Australian Financial Review, based in Melbourne.